China firm appeals ROC rejection of listing

TAIPEI, Taiwan -- China Crystal New Material Holdings Ltd. (中國晶體新材料), a China-based mica product supplier, has filed a petition to appeal the Financial Supervisory Commission's (FSC) rejection of its application for a primary listing on Taiwan's over-the-counter market, the FSC said Tuesday.

The FSC, Taiwan's financial regulator, said the petition will be forwarded to the Executive Yuan for review.

If the Cabinet upholds the FSC's decision, as is expected, China Crystal, a Cayman Islands incorporated company, will be eligible to file an administrative lawsuit against the FSC.

The FSC said it turned down China Crystal's OTC listing application on May 30 because the GreTai Securities Market (GTSM), which runs Taiwan's OTC market, revoked its approval for the company's listing plan.

The GreTai market backtracked on the case because it discovered it had used an inappropriate method to review the listing application, the FSC said.

Because Chinese investors hold a more than 40 percent stake in China Crystal, the application should have been reviewed on a "case-by-case" basis applied to Chinese-invested companies instead of the general review process used for other entities, the FSC said.

Chief's Citizenship a 64,000 question

According to a prospectus filed by China Crystal to the GTSM, China Crystal Chairman Dai Jialong (戴加龍), who owns a 46.23 percent stake in the company, was listed as a Philippine national, leading the GTSM, to use the general review process to vet and approve the application.

But the Gretai market reconsidered its position after learning that Dai was a Chinese citizen before changing nationalities and decided to treat China Crystal as a Chinese-invested entity, the FSC said.

Under existing securities listing rules, only foreign incorporated companies in which Chinese investors own no more than a 30 percent stake are eligible to have its case considered under a general review process.

In the case-by-case review process, a China-based company must prove that Taiwanese investors will have a final say in the company's operations.

China Crystal said it was challenging the decision because of its lack of merit, especially in treating Dai as a Chinese investor despite his change in citizenship.

The FSC said the strict review process for Chinese-invested firms seeking to list in Taiwan was set up to protect local investors' interests.